A year since the publication of a new global sustainable procurement standard, Jonathan Dutton looks at the impact on procurement and contract management in government and the corporate sector.
- This is the first in a new monthly column for Government News, written by procurement specialist Jonathan Dutton, examining key issues in procurement at all levels of government in Australia.
While there’s been no formal research yet on the take-up in Australia of the new international standard for sustainable procurement, the ISO 20 400, anecdotal evidence suggests procurement professionals are increasingly aware of it.
Various procurement and contracting bodies in Australia have helped spread the word.
Yet at two recent procurement conferences a straw-poll yielded miserable results. When audiences of more than 100 procurement professionals at each were asked if they had adopted the new standard in whole or in part, or even felt that it had directly influenced their organisation’s sustainable procurement policy, fewer than 10 per cent raised their hands.
On the flipside, a 10 per cent take-up of a guidance document within a year might not yet be a cause for alarm. The clearest early benefit of ISO 20 400 might be the publicity value in persuading organisations that to do nothing in future is not an option.
Broad view of sustainability
The development of ISO 20 400 sought to collate a wide range of disparate examples of socially responsible and sustainable procurement activity into a single non-mandatory guidance document.
The standard takes a wider scope for sustainable procurement beyond sustainability in its narrowest definition of environmentalism. In fact, the term sustainability now envelops social (good), economic (development) and environmental (improvement) factors.
This approach was a natural result of garnering input from 52 countries and 1,000 people who contributed over a two-year period.
Australia was a key part of the process and the eclectic Sydney committee, which included NSW Government, consultants, practitioners, companies, not-for-profit organisations and professional bodies had a significant input.
Subsequently, those Sydney members have championed the new standard and set up a website as a free reference. They seem to have made a difference within their spheres of influence.
Critics of the new standard complain it is overlong, overreaching, overly detailed and overambitious.
Champions retort it needs to cover the breadth of both practice and theory to remain relevant in future and, crucially, offer something of the how as well as the why of socially responsible and sustainable procurement.
Advocates also say it must be consistent with other standards and initiatives around the world, even with the intent of potential future laws; Australia is expected to enact its own Modern Slavery Act and many expect procurement to play a lead role in this area.
Prior good practice
There are many examples of good practice in sustainable and socially responsible procurement that existed well before the new standard was formed.
The Victorian Level Crossing Removal Authority’s social procurement policy is held up as an example that delivers a wide range of benefits.
Key projects at Australia Post and Rio Tinto that started as supply side corporate social responsibility initiatives have subsequently delivered material business benefits. In the case of Australia Post it’s been recyclable uniforms with predestined outlets, while for Rio Tinto it was the boring of water wells in Mauritanian villages to improve health of local support workers.
Many organisations have now adopted some form of social procurement policy. Most were largely in train before the new standard was published, although drafts were widely available in the two years previous.
Corporate companies have adopted supply side corporate social responsibility policies because of conviction, shareholder and staff pressure, brand positioning theory, customer preference or post-crisis after a major supply chain shock.
However, how well these new policies have gained traction is not always clear.
Similarly, government jurisdictions and agencies usually have sustainability policies, often influenced by government policy at federal or state level.
The NSW Government is finalising its own sustainable procurement policy framework, although it is unclear how closely this might or might not be aligned to ISO 20 400.
The Commonwealth procurement rules apply to federal government buyers. But they are often reflected in other jurisdictions such as state governments, public agencies and even local councils. And these are more influential in the private sector than given credit for.
These were implemented in July 2015, well before the new standard was launched, although revisions to Commonwealth’s rules have been subsequently implemented – as recently as January.
The Department of Finance, which administers the Commonwealth’s procurement rules, points out they are broadly consistent with the principles behind ISO 20 400 and that they “allow for the consideration of a range of social and sustainability factors when undertaking a procurement.”
Perhaps naively, some practitioners and analysts felt that ISO 20 400 would be a real catalyst for change, that procurement professionals might use it as a lever to drive broader and deeper sustainability initiatives – even down the length of the supply chain, the holy-grail of sustainable procurement.
Some supply chains have no choice but to clean up; their core business is driven by a vulnerable supply chain, which ironically can make it easier to change. Often it’s sparked by a visible issue or incident – such as child labour becoming evident within a high-tier supplier, or a major producer of smartphones allegedly exploiting workers.
It’s not easy mapping 17 tiers down the supply chain from your local 7/11 service station back to the Ivory Coast fields where the coca-beans are picked to make certified chocolate – like Fair Trade did. But not everyone has to take on that sort of commitment or budget to improve the impact of a singular global supply chain.
Individuals in key procurement roles seem increasingly keen to drive their own initiatives where possible – whether they are directly or indirectly relevant for their organisations. These (sometimes almost random) initiatives fly because they are broadly consistent with stated corporate intent from the top, more than hard policy or practical strategy. And, they are difficult to deny.
Indeed, many good sustainable procurement initiatives seem almost coincidental to corporate policy, rather than driven by it. The staff seem to take a lofty mandate from the boss and turn it into action.
Ultimately, it appears the top-down intent of both public departments and corporates is often currently driven more by bottom-up individual employee activism than by departmental or corporate leadership.
More work to do then, in order to match top-down policy with bottom-up enthusiasm.
But it’s still early days; why not start by drafting your own department’s sustainable procurement policy?
Jonathan Dutton, an independent management consultant specialising on procurement, was the founding CEO of CIPS in Australia from 2004 to 2013.
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